Alaska's topsy-turvy exploration season

As the rest of the country suffers through the Dog Days of summer, Alaska is approaching the end of a topsy-turvy summer season that saw unseasonably hot, dry weather in some parts of the state during some parts of the summer, while other parts of the state have seen record rainfall and unseasonably early snowfall.

Gold prices have skyrocketed over the $1,500 per ounce mark and silver prices have moved strongly up, now trading at a one-year high. However, copper and zinc are approaching one-year lows, indicating the disconnect between industrial metals demand and the flight to safe-haven precious metals caused by global economic uncertainties.

On the home front, the University of Alaska Anchorage's Institute of Social and Economic Research reported that Alaska crude oil prices averaged $65 per barrel in the last two months, well off the $66.80 per barrel prices of a year ago. And, although Alaska oil production over the same two months of 2019 has been about 2,000 barrels per day more than in 2018, for the year, Alaska crude production has averaged 20,248 barrels per day less than the first seven months of 2018.

Several of Alaska's operating mines have reported strong second quarter production results and a number of exploration projects are reporting positive results for their ongoing 2019 programs. And last but perhaps most exciting, the BLM has released the Draft Environmental Impact Statement for the Ambler District industrial access road project!

WESTERN ALASKA

Teck Resources Ltd. and partner NANA Inc. reported the Red Dog mine produced 158,000 metric tons of zinc in concentrate during the second quarter, a slight increase over the same period of 2018. Zinc ore grade during the second quarter 2019 was 15.6 percent, down from the 16.4 percent last year, and mill recoveries were steady at 84.9 percent. The mine also produced 29,000 metric tons of lead in concentrate, a significant increase powered by increased mill recoveries of 57 percent despite lead ore grades decreasing from 4.7 to 4.3 percent. The mine posted a $142 million operating profit for the quarter, down significantly from the $161 million profit in the year previous period. In accordance with the operating agreement between Teck and NANA, the mine currently pays to NANA a royalty on net proceeds from production. Royalty costs for the second quarter were $10 million versus $22 million for the same period of 2018. Full year production was increased over previous estimates and is now estimated at 535,000 to 560,000 metric tons of zinc.

Northern Dynasty Minerals Ltd. reported that the U.S. Environmental Protection Agency has taken action to withdraw a Proposed Determination affecting the Pebble copper-molybdenum-gold project initiated during the Obama Administration in 2014. The EPA had attempted an unprecedented pre-emptive veto of the project before it received the required regulatory review under the National Environmental Policy Act under Section 404(c) of the Clean Water Act. Vacating this proposed determination will remove any cloud lingering over the Environmental Impact Statement and federal permitting process for the project which has been advancing under NEPA lead by US Army Corps of Engineers. The Corps has published a timeline at http://www.pebbleprojecteis.com that indicates it expects to finalize the Pebble Project EIS in early 2020 and issue a final Record of Decision by the middle of next year.

Quaterra Resources Inc. and Chuchuna Minerals Company announced the start of a 1,500-line-kilometer ZTEM airborne geophysical survey over their Groundhog copper-gold prospect located 185 miles southwest of Anchorage. Chuchuna has also mobilized a ground crew that is conducting geologic mapping, prospecting, and sampling. Groundhog covers the northern extension of a six-mile-wide north-northeast trending structural zone that hosts several porphyry copper-gold prospects, including Northern Dynasty's Pebble porphyry copper-gold-molybdenum project, which is approximately three miles south of the Groundhog claim boundary. Regional magnetic data suggest that geology similar to that at Pebble extends under cover for an additional 19 miles northeast from the Pebble deposit. Quaterra can earn a 90 percent interest in the project by expending $5 million on exploration over six years and paying a lump sum of $3 million at the end of the sixth year.

HighGold Mining, Inc., recently spun out of Constantine Metal Resources, announced its intention to raise C$7.65 million to be used in part to fund exploration of its Johnson Tract polymetallic project located near tidewater 125 miles ‎southwest of Anchorage. The new company president, Darwin Green, will be a familiar and welcome face in Alaska, having been instrumental in the exploration and advancement of Constantine's Palmer volcanogenic massive sulfide deposit near Haines.

Redstar Gold Corp. announced that it has signed a sub-surface agreement renewal with The Aleut Corporation (TAC). The agreement provides for an exploration license with a follow-on 20-year extendable mining lease on TAC's properties which form part of Redstar's Unga epithermal gold-silver project on Unga and Popof Islands. The agreement runs for a period of eight years allowing the company to conduct sub-surface work including drilling, trenching and sampling which will permit advance of some 38 distinct mineral prospects including the Shumagin Zone. To define drill targets at Unga, the company is carrying out structural mapping recommended by Professor Jeffrey Hedenquist, an epithermal geology expert that investigated the Unga project in 2016. In addition, Redstar is conducting selective geophysical and geochemical surveys to support the mapping with the object of generating targets that will consistently intersect high-grade gold bearing rock through the next phase of drilling.

INTERIOR ALASKA

Kinross Gold Corp. reported that the Fort Knox mine near Fairbanks produced 55,440 ounces of gold at a cost of $910/oz during the second quarter, versus 71,463 oz of gold at $969/oz during the second quarter of 2018. Production costs decreased compared with second quarter of 2018 largely due to an increase in ore grades. The mill processed 1.81 metric tons of ore grading 0.59 grams of gold per metric ton with a recovery of 81 percent. The heap leach saw additions of 3.44 million metric tons of ore grading 0.20 g/t gold. For the quarter, production increased compared with the previous quarter mainly as a result of timing of ounces recovered from the heap leach pads, partially offset by lower mill grades and weather-related conditions that affected geotechnical stability in the northwest section of the pit. Production decreased year-over-year primarily due to lower mill throughput and less ore placed on and recovered from the heap leach pads, partially offset by higher mill grades. Cost of sales per oz of gold sold decreased compared with the previous quarter primarily due to the timing of oz recovered from the heap leach pads, and decreased year-over-year mainly due to lower operating waste mined and favorable processing costs. On the development front, the mine continued work on the Gilmore extension to the west of the main pit. The Gilmore project is progressing on schedule and on budget, with initial ore now expected later in the year. Construction of the new heap leach pad is underway with half the impermeable liner now laid. Dewatering for the Gilmore pit expansion is proceeding according to plan and stripping for the initial Gilmore pushback is on target to begin in late third quarter of this year. The project is expected to extend mine life to 2030 at a low capital cost, generate an internal rate of return of 17 percent at a $1,200 per ounce gold price, and increase life-of-mine production by approximately 1.5 million gold equivalent ounces.

Avidian Gold Corp. announced that exploration was proceeding at its Amanita gold project in the Fairbanks District. The objective of the 2019 exploration program is to expose and sample the mineralized Tonsina Trend through a series of widely spaced trenches along a 3,000-meter strike length. This effort will include delineation of mineralized structure, mapping of vein systems and selection of drill hole locations. To date, trenches adjacent to Kinross Gold's Fort Knox property boundary and in the main mineralized area have been completed. The program is anticipated to be completed by the end of August. A total of 4,700 meters of reverse-circulation drilling was completed by previous operators in 39 holes on the Tonsina Trend, with 30 of the holes intersecting grades greater than 1 gram of gold per metric ton over widths of at least 1.5 meters, with several of the holes reported to contain visible gold. Significant drill results from the Tonsina Trend include 4.57 meters of 11.49 g/t gold, 22.86 meters of 1.01 g/t gold, 12.19 meters of 2.28 g/t gold and 13.72 meters of 3.02 g/t gold. Results from drilling outside the Tonsina Trend include 10.57 meters of 1.08 g/t gold and 3.05 meters grading 0.96 g/t gold.

Freegold Ventures Limited announced the start of 2019 drilling at its Shorty Creek copper project near Livengood. The 2019 program is fully funded under the agreement with a wholly owned subsidiary of South32 Ltd. The first phase of the program commenced in May and consisted of induced polarization and geochemical surveys. A severe wildfire fire in the area delayed the start of the drilling program, which was originally anticipated to start in mid-July. The 2019 drill program will consist of 2,000 meters of core drilling aimed at further expanding the mineralization at Hill 1835 and further testing of the Hill 1710 target area. Total expenditures for 2019 are anticipated to be $2.3 million.

Northern Star Resources Ltd. announced its Pogo gold mine near Delta Junction produced 50,566 ounces of gold during the second quarter, up 27 percent from the previous quarter. All-in sustaining cost of production was down 18 percent to $1,207 per ounce versus $1,468 per ounce in the previous quarter. Expansion of activities at the mine included a 13 percent increase in development meters and a 250 percent increase in stoping metric tons, which now account for 33 percent of mill feed, versus 11 percent in the previous quarter. The company also reported that its new mobile mining fleet was delivered and became operational in the quarter and eight diamond drills were operational underground. Average mine grade over the first half of 2019 was 7.6 grams of gold per metric ton, which included average stoping ore grades of 10.2 g/t gold. Average mill recovery was 88 percent. The company is planning to ramp up mining rates to more than 1 million metric tons per year with 60 percent of its mill feed coming from stoping ore. Following arrival of its new mobile mining fleet, the mine saw a 43 percent increase in development meters advanced. The mine also is transitioning from cut and fill mining to longhole stoping, reducing mining costs from $136 to $42 per metric ton. The company indicated that it was spending approximately $21 million per month to upgrade mine output and expected to spend about $18 million per month in the second half of 2019. The company also announced an updated mineral resource for the mine, the largest in history for the operation. At a cut-off grade of 3.8 g/t gold, the mine is carrying total resources of 19.33 metric tons grading 9.6 g/t (5.95 million oz) gold. This resource includes a maiden resource at the Central Vein deposit of 500,000 oz in a resource averaging 7.9 g/t gold and a maiden resource at the Hill 4021 deposit of 500,000 oz in a resource averaging 8.2 g/t gold. And buried on page 279 of their resource update was this little factoid – over the mine's life, more than 2.5 million feet of drilling has been completed! On the exploration front, underground drilling remains focused on all the major Liese Vein systems (L1, L2, L3), North Zone, X-Vein, South Pogo and Fun Zone areas with excellent intersections recorded from the extensions to all known systems. Surface diamond drilling continued with four surface rigs undertaking infill and extensional programs at the Central Vein Project. Elsewhere in the region, in April the company acquired the Stone Boy project from SC Minerals America Inc., SMM Exploration Corp and Stone Boy Inc. The Stone Boy project claims include Fog, Shaw, Skippy and Ink including the Brink exploration camp, and also acquired Stone Boy Inc., for consideration of $1.2 million. Stone Boy Inc. (together with SC Minerals America Inc. and SMM Exploration Corp), remain the current owners of the Monte Cristo project which is the subject of a 2016 option agreement with Great American Minerals Exploration Inc to purchase the Monte Cristo project and is currently sole funding exploration on the project pursuant to its agreement.

Millrock Resources Inc. announced that a portion of its non-brokered private placement has closed, generating gross proceeds of just over $1 million. The company indicated that roughly 30 percent of net proceeds from the offering will be used to advance exploration and secure drilling permits at its West Pogo gold project.

ALASKA RANGE

White Rock Minerals Ltd. and its joint venture partner Sandfire Resources NL announced an exploration update for its Red Mountain volcanogenic massive sulfide project in the Bonnifield District. Summer field exploration activities commenced in late May with on-ground activities including surface reconnaissance mapping, surface soil and rock chip sampling, ground electrical geophysics, downhole electromagnetic surveys and diamond drilling. Final data from the 500-square-kilometer airborne electromagnetic (AEM) geophysical survey flown this spring was integrated with surface geochemistry to prioritize a number of identified targets for drill testing. Prospecting of the northern limb along the six-mile-long Glacier Trend has identified sulfide accumulations, chert and iron formations, all believed to be proximal to horizons prospective for base metal rich massive sulfides along strike and down dip. Additional lithogeochemical analysis of rock chip data has assisted in prioritizing areas of interest along the Glacier Trend, specifically characterizing vectors associated with black shales and exhalite horizons is now being assessed in conjunction with identifying distinct conductivity responses from the AEM data to assist in drill targeting. The first seven holes drilled this year did not encounter significant massive sulfide mineralization. The first three drill holes were previously reported at the WTF (1 hole) and Hunter (2 holes) prospects. The subsequent four diamond drill holes tested targets at Platypus (DC19-93), Megan's (DC19-94), Stingray (WT19-31) and Mantaray (DC19-32). The drill rig has now moved to the Arete prospect where the target is the down-dip projection of a massive sulfide outcrop that exhibits a distinct conductivity response in the AEM data and has similarities in geometry and strength to those at the Dry Creek and WTF deposits. Following the Arete drill hole a number of new targets along the Glacier Trend are being finalized prior to drill testing. Target priorities have been identified at the Sheep/Rogers, Artesia, Irish Knob and Smog South prospects where a combination of exhalative horizons, anomalous geochemistry and coincident AEM conductivity anomalies are being modelled.

PolarX Ltd. and joint venture partner Lundin Mining Corp. announced that induced polarization ground geophysics at the Saturn copper‐gold porphyry target within its Alaska Range project has identified several anomalies consistent with porphyry copper system alteration and mineralization. The first two holes of a 5,000 meter drill program are in progress. Saturn is approximately 3,000 meters east of PolarX' 100 percent owned high‐grade Zackly skarn deposit, a style of mineralization often associated with large mineralized porphyry systems. The Saturn anomaly is interpreted to be the potential fluid source for the east‐west trend of skarn mineralization and alteration discovered at Zackly. At Saturn, IP surveys indicate the highest chargeability occurs on the outer flanks of the central magnetic high, surrounding a zone of elevated chargeability associated with the magnetic high. The geophysical data also show zones of decreased resistivity above the chargeability highs, possibly indicating the presence of clay‐minerals associated with argillic alteration or weathering. Additional IP surveys are in progress and further drilling is planned pending integration of geophysical data with existing geology, geochemistry and geophysics.

New Age Metals Inc. provided an update on exploration efforts at its Genesis copper-nickel-platinum group element project near Glennallen. The 2019 exploration program is comprised of three phases of work – ASTER (Advanced Spaceborne Thermal Emission and Reflection Radiometer) imaging and interpretation; Landsat TM imagery processing; and interpretation of existing ground induced polarization, airborne magnetics and airborne resistivity. The main objective of the ASTER processing and interpretation is to map potential alteration targets to aid district-scale copper-nickel-platinum group element sulfide exploration. The end goal of this phase is to generate three false color images, each designed to enhance the alteration associated with different phases of sulfide alteration and mineralization. The Landsat thematic mapper data will be utilized to interpret the distribution of general clay alteration targets and potential iron-oxide alteration targets to generate a visual distribution map of these features. The geophysical effort includes reprocessing of existing state of Alaska airborne magnetic data in 2D and 3D formats to outline chromite-bearing platinum group element accumulations and identify structural domains. Reprocessing of existing state of Alaska airborne resistivity data will generate 2D and 3D formats to outline copper-nickel-platinum group element sulfide conductors and identify structural domains. Reprocessing will be conducted of a limited ground induced polarization program previously completed over the Sheep Hill prospect where stratiform copper-nickel-platinum group element sulfide-bearing horizons have been identified.

Nova Minerals Ltd. announced completion of a preliminary resource drilling program on their Estelle gold project in the western Alaska Range. The focus of this year's drilling efforts are designed to prepare the Oxide Korbel prospect for completion of an initial industry compliant resource estimate. Exploration efforts have confirmed the Oxide Korbel prospect resource Block A and B span over 1,000 meters of strike and average up to 500 meters wide. The mineralization generally begins at surface and has been consistently traced to a vertical depth averaging over 150 meters and ranging up to 450 meters. Mineralization at Oxide Korbel remains open to expansion and a major drilling program is being planned to target potential strike and depth extensions. The company is planning additional permitting and exploration elsewhere on the project, including the Oxide Korbel, Oxide South, Oxide North, RPM, Shoeshine and Revelation prospects.

Avidian Gold Corp. announced that exploration was proceeding at its Golden Zone project in the Chulitna District. The objective of the 2019 program is three-fold – adding additional gold ounces in the immediate area and vicinity of the Breccia Pipe deposit; refining the interpreted mineralization model and establishing follow-up drill targets at Mayflower Extension and BLT zones; and determining drill hole locations on the JJ discovery zone through continued prospecting to determine size potential. This latter effort will include more regional exploration for additional JJ type mineralization. Field exploration has already been successful in extending the footprint of the JJ zone and identifying multiple new areas of interest. Reviews of the Breccia Pipe area and Mayflower Extension Zone have identified multiple new drill targets. A geochemical survey north of MEZ has been initiated in an area that had previously not been explored. The property hosts an industry compliant resource within the Breccia Pipe deposit that includes 4.19 million metric tons indicated resource averaging 1.99 grams per metric ton (267,400 ounces) gold; plus 1.35 million metric tons of inferred resource averaging 0.83 g/t (35,900 oz) gold.

NORTHERN ALASKA

Goldrich Mining Company announced the dissolution of Goldrich NyacAU Placer, LLC, a 50-50 percent joint venture between Goldrich and NyacAU, formed to mine the various placer gold deposits that occur throughout Goldrich's 23,000-acre Chandalar gold project in the southern Brooks Range. Goldrich said the JV was dissolved because it failed to meet the minimum production requirements as established by the partners. Goldrich is in the process of developing a new mine plan for the Chandalar project. As previously announced, the Chandalar mine production for 2018 was 20,900 ounces of placer gold, which is approximately equivalent to 17,100 oz of fine gold. Over the course of the partnership, from 2015 through 2018, production totaled 50,500 oz of placer gold, or about 41,500 oz of fine gold.

After nearly a 40-year wait since the Alaska National Interest Lands Conservation Act (ANILCA) mandated (yes, mandated) that access be built from the Dalton Highway to the Ambler Mining District, on Aug. 23 the U.S. Bureau of Land Management announced the release of the Draft Environmental Impact Statement for the Ambler District industrial access road. The Alaska Industrial Development and Export Authority (AIDEA) is the proponent of the access road. A series of public hearings about the proposed Ambler road project will be held from Sept. 10 through Oct.11 at various locations throughout Alaska and in Washington, D.C. The road would cross 61 percent state lands, 15 percent Alaska Native corporation lands, and 24 percent federal lands managed by the BLM and the National Park Service in the Gates of the Arctic National Park and Preserve. AIDEA estimates creating an annual average of 486 jobs during the road construction period and up to 68 full-time jobs for road operations and maintenance over the life of the road. The real impact for the proposed 211-mile, all-season road would be further mineral exploration and eventual hardrock mine development in the Ambler District by entities including Trilogy Metals, South32 Limited, NANA Regional Corporation, Inc. and Valhalla Metals Inc., all of whom have active mineral exploration projects along the proposed road corridor. The Draft Environmental Impact Statement and Draft ANILCA Section 810 Subsistence Evaluation along with the dates and locations for public meetings are available at http://www.blm.gov/AmblerRoadEIS for public review and comment through Oct. 14, 2019.

SOUTHEAST ALASKA

Hecla Mining Company announced that its Greens Creek mine on Admiralty Island produced 2.37 million ounces of silver and 13,256 oz of gold during the second quarter, compared to 2 million oz of silver and 13,720 oz of gold during the same period of 2018. Higher silver production, the highest in three years, was due to higher ore grades related to mine sequencing. Operating costs increased to $2.38/oz of silver versus negative-$3.47/oz of silver in the year-previous period. Oddly enough, the increased silver production means there is less by-product credit to apply to each ounce of silver so the cost per oz of silver production after by-products is higher. The per oz silver costs were higher primarily due to lower by-product metal prices and production, partially offset by higher silver production. The average grade of ore mined during the quarter was 14.36 oz of silver per ton, up from the average grade of 12.46 oz per ton that was mined in the second quarter of 2018. Gold, lead and zinc grades averaged 0.092/oz gold, 2.75 percent lead and 6.82 percent zinc, all down from the previous year's second quarter grades. During the second quarter the mine also produced 4,628 tons of lead and 12,739 tons of zinc. The mill processed 209,370 tons of ore during the quarter, up from 208,409 tons milled in the year-previous period. The mill operated at an average of 2,301 tons per day versus 2,290 tons per day in the year-previous second quarter. Forecast 2019 production from the mine was increased to 9 million oz of silver and 52,000 oz of gold. On the exploration front, drilling in the second quarter and strong assay results from previous drilling have upgraded and expanded the NWW, 9A, East Ore zones resources. In the East Ore Zone, drill intersections confirmed mineralization over 200 feet along the central portion of the resource. Strong assay results included 21.57 oz of silver per ton, 0.25 oz/t gold, 8.44 percent zinc and 2.59 percent lead over 16.2 feet; and 64.09 oz/t silver, 0.18 oz/t gold, 8.08 percent zinc and 2.1 percent lead over 9.5 feet. Drilling is planned for the remainder of 2019 with the goal of continuing to upgrade this resource to the north. Drilling continued at the southern-most and lower portions of the NWW Zone evaluating over 400 feet of strike length. Recent assay results include 40 oz/t silver, 0.04 oz/t gold, 29.07 percent zinc and 14.56 percent lead over 5.8 feet; and 130.44 oz/t silver, 0.28 oz/t gold, 8.33 percent zinc and 5.2 percent lead over 1.4 feet. The drilling shows the mineralization is generally contained within argillites with a precious metal-rich zone identified west of the current resource and a base metal-rich zone (16-20 percent zinc) extending beyond the current resource. This drilling also shows a second band of mineralization that extends to the east of the current resource. Definition drilling of the 9A Zone targeted 200 feet of strike length in the middle of the zone. Recent results included 29.41 oz/t silver, 0.35 oz/t gold, 8.88 percent zinc and 4.31 percent lead over 20.1 feet; and 35.75 oz/t silver, 0.37 oz/t gold, 13.65 percent zinc and 6.76 percent lead over 10 feet. The 9A Zone is structurally complex and multiple drill holes intersected mineralization across several bands. A drill has moved to the M390 drift at the south end of the mine where exploration drilling is planned to evaluate three flat-lying, high-grade lenses that are folded to the west. Definition drilling for the remainder of 2019 is planned to focus on the East Ore, 200 South and 9A zones. Definition drilling of the Upper Plate has stopped but is expected to resume in the fourth quarter. Exploration drilling later in 2019 is planned to target the southern extension of the 200 South Zone and the Deep Southwest.

Constantine Metal Resources Ltd. announced that they have received approval of their underground exploration plan of operations on the Palmer polymetallic project, a joint venture between Constantine and Dowa Metals & Mining Co. Ltd. The plan of operations was submitted seven months ago to the Alaska Mental Health Trust Lands Office, Alaska Department of Natural Resources and Alaska Department of Environmental Conservation. The plan calls for excavation of approximately 2,000 meters of underground ramp to provide a drill platform for exploration and access to gather additional geotechnical and hydrological data; completion of 30,000 meters of underground exploration drilling; surface placement of waste rock from underground excavation; construction of sediment settling ponds; and construction of other facilities necessary for the underground excavation and drill programs. Other summer activities include regional and detailed geological mapping, engineering and environmental baseline work to support future economic studies.

Grande Portage Resources Ltd. announced that it has commenced a summer field program at its Herbert gold project located north of Juneau. The program includes trenching and channel sampling on numerous locations on the Deep Trench Vein and other locations on the Main Vein. Trenching on the Deep Trench Vein will be conducted near the central portion of the vein and near the eastern limit of past successful drilling which focused on an outcrop where chip sampling of the vein assayed 14.1 grams per metric ton gold. Another location for trenching has been chosen near the eastern end of the vein where it has split into two strands. The north strand was intersected by DDH 10B-1 and returned 0.52 meters of 9.4 g/t gold and crops out just west of the drill station. Additional fieldwork will include geological mapping, metallurgical sampling and new prospecting on the property as a follow up to the company's 2018 LiDAR survey. To date, prospecting, mapping and drilling have tested less than 1,000 meters of the 4,600-meter gold trend. The LiDAR survey clearly extends the prospective structures for at least another 1,400 meters to the southeast and 400 meters to the northwest. These new structures will be prospected, mapped, and sampled to advance them toward the drill stage. Current resources at the project include 606,000 ounces of gold in indicated resource averaging 10.03 g/t gold; and 252,000 oz of gold in inferred averaging 14.15 g/t gold.

Curtis J. Freeman CPG #6901

Avalon Development Corp.

P.O. Box 80268

Fairbanks, AK 99708

Tel: 907-457-5159

Fax: 907-455-8069

[email protected]

http://www.avalonalaska.com

Author Bio

Curt is President of Avalon Development Corporation, a mineral exploration consulting firm based in Fairbanks, Alaska. He is a U.S. Certified Professional Geologist with the American Institute of Professional Geologists (CPG #6901) and is a licensed geologist in the State of Alaska (Lic. # AA 159).

• Email: [email protected]
• Phone: 907-457-5159
• Contact Curt Freeman